* U.S. new weekly jobless claims hit 16-year high
* Continuing claims rise to highest since 1982
* Philly Fed Mid-Atlantic factory index hits 18-year low
* Leading Economic Indicators index falls
(Updates with latest on markets, paragraph 14)
By Burton Frierson
NEW YORK, Nov 20 (Reuters) - The number of American workers
on the unemployment rolls surged to the highest in a quarter
century and a regional manufacturing gauge slumped as U.S.
economic misery intensified, new reports showed on Thursday.
The data was the latest in growing evidence that shows the
United States, like other rich nations, has probably entered
one of the worst downturns in decades. Economists expect the
world's leading economies to be in recession for about a year.
The number of U.S. workers filing new claims for jobless
benefits jumped last week to the highest in 16 years, Labor
Department data showed, suggesting next month's payrolls data
will add to the 1.2 million jobs already eliminated this year.
"I think this is going to be not only a deep recession, at
least in the next couple of quarters, but also a long
recession," said Conrad DeQuadros, senior economist at RDQ
Economics in New York.
Worse yet, the number of workers remaining on jobless
benefits, or continuing claims, was the highest since December
1982, rising to 4.012 million in the week ended Nov. 8, the
latest data available, from 3.903 million the prior week.
An index of factory conditions in the U.S. Mid-Atlantic
region fell to another 18-year low in November, highlighting
concerns the United States could be headed for a destructive
deflationary spiral.
The Philadelphia Federal Reserve Bank business activity
index fell to minus 39.3 from minus 37.5 in October. A reading
below zero shows contraction in the region's manufacturing.
A key measure of inflation in the survey, the prices paid
index, fell to its lowest since the survey's launch in 1968.
This follows data on Wednesday showing U.S. consumer prices
fell at a record pace in October, highlighting the potential
for a debilitating deflationary decline in prices throughout
the economy that could affect everything from wages to stocks.
THE BIG ZERO
The Fed, in a rare move, said on Thursday it would expand
its December policy meeting to two days to allow more time for
discussion. The meeting, originally scheduled for Tuesday, Dec.
16, will now begin on the afternoon of Monday, Dec. 15.
JP Morgan said it expected the Fed to slash its key federal
funds target rate to zero from the current 1 percent by January
and that the deflation threat was growing.
"Deflation becomes more likely in an environment where
labor market slack is building and ongoing financial tightening
is delaying the prospect that slack begins to get worked down,"
JP Morgan economist Michael Feroli said in a research note.
U.S. stocks fell to their lowest in 11-1/2 years, measured
by the S&P 500. The dollar tumbled against the yen while
government bonds, which benefit from signs of economic
weakness, rallied strongly.
Initial claims for state unemployment insurance benefits
rose to a seasonally adjusted 542,000 in the week to Nov. 15
from a revised 515,000 a week before, the Labor Department
said. That was higher than analysts' forecast of 505,000. The
four-week moving average of new claims, a smoother gauge of
underlying trends, rose to its highest since 1983.
The United States was not suffering alone with grim jobs
data. French carmaker PSA Peugeot Citroen said it would cut
2,700 jobs, Anglo-Swedish drugmaker AstraZeneca saw 1,400
losses over coming years and engine maker Roll-Royce expects up
to 2,000 job cuts next year.
The Swiss National Bank made a surprise one percentage
point cut in interest rates on Thursday, trying to stave off a
recession as the global outlook worsens fast.
The U.S. Conference Board said its index of Leading
Economic Indicators fell more than expected in October, as
stock prices dropped and consumer expectations weakened.
The index fell 0.8 percent to 99.6 after rising by a
revised 0.1 percent in September.
"The economy is contracting, and the pace of contraction
may intensify over the next few months," said Ken Goldstein,
economist at the Conference Board.
(Additional reporting by Lucia Mutikani in Washington; Editing
by James Dalgleish)
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